Frederick Reichheld – who was a partner with Bain at the time – popularized the notion of ‘good profits’ and ‘bad profits.’
Good profits come about when you deliver a product or service that makes your customer delighted. They love what you give them and are happy to compensate you in return. Think of a time when you ate at a restaurant and the food was delicious and the service exceptional. You had a marvelous time and left an outsize tip. That restaurant generated good profits.
Now think of a time when you stayed at a hotel and your cell phone had no charge. You used the hotel phone to make a couple of local calls and were hit with a $20 charge. Also, the in-room dining was tardy, the food mediocre and service atrocious. That hotel earned bad profits.
Let me give you some examples of good profits and bad profits and I will show you how these concepts can enrich your life.
Many decades ago we went on a vacation to Ooty, a resort town in South India. We stayed at a supposedly luxury hotel which was anything but that. The hot and cold water knobs on the shower were mislabeled. They were switched. It was a hot day and my daughter, Gowri, who was eight at the time, turned on the cold water and stepped into what should have been a cooling torrent. Scalding water hit her neck and chest and she jumped back screaming.
I rushed to the hotel office and called for an ambulance. I was charged Rs.2 for the call. This is about as bad as profit can get.
Here is an example of good profit.
Avetik Grigoryan is a super grandmaster in chess. He is the founder and CEO of ChessMood, an online chess training company. I have mentioned him in an earlier blog.
Avetik created ChessMood as a labor of love. He had been to dark places and starting the company was his journey to a happier state of being. He had no funding and used savings to cover salaries and expenses. He wanted to help players improve their chess prowess and, by doing so, also improve their lives.
A month after launching he had about a hundred students and he knew them all. One customer, Badreddine Ouali, had already paid for the third month but hardly ever visited the site. So, he messaged him “Hey. It seems you’re busy, my friend. Would you like me to cancel your membership? And you can rejoin when you have more time?”
Avetik wanted paying subscribers. But he wanted them to benefit from what he was creating. He wanted to deliver overwhelming value. And he felt uncomfortable accepting money from someone who was not using his site.
A confused Badreddine messaged back “Avo, it seems you’re a strong chess player, a nice guy, but you don’t know how to do business, hahaha. Keep my membership. Let it be the support to ChessMood.”
When you are focused on generating good profits, the universe reaches out to help you.
Badreddine Ouali was intrigued by Avetik’s vision and they became friends. He was the founder and CEO of a software company that served financial institutions.
A few months later Ouali decided to invest in ChessMood and did so without any terms. He financed the redesign of the site and helped Avetik make major improvements.
Avetik and Badreddine are now close friends and meet in Tunisia and Dubai and Armenia and other places. They talk about life, and business and philosophy. And about chess.
And ChessMood grows from strength to strength. I discovered that my son, Gautam, is one of the earliest ChessMood subscribers and he still takes weekly lessons from one of ChessMood’s roster of grandmasters.
Treat every interaction you have with another person like a transaction. Try to generate a ‘good profit’ from that transaction. Try to leave that person in an elevated state of being. Try to ‘feed the dog’ and see how your life improves.
Peace!
